‘You don’t must have cash to have enjoyable’ | USAEMALL.com

Stay informed with free updates

Simply sign up to the Pensions industry myFT Digest — delivered directly to your inbox.

Sarah Smart, 52, wanted to live in Scotland when she left university because she had spent time scuba diving there and loved it. When she asked one of her tutors what she could do with her classics degree north of the border, he suggested she would make a “really good accountant”. 

At first horrified by the prospect, she soon realised that accountancy provided excellent business training and could enable her to work across the country.

Smart, who will step down in July as chair of The Pensions Regulator after four years to take time out to recover from the tragic death of her husband Fraser in 2023, has held non-executive positions at the UK public body since 2016.

She trained as an auditor at PwC in Edinburgh and then Glasgow, before spending nine years in various investment roles at Standard Life Investments. 

Aged just 35, she moved into a portfolio career of non-executive and trustee roles. These included acting as chair of TPT Retirement Solutions, a board member of the London Pensions Authority, a member of the investment committee of Unilever’s UK pension scheme and chair of the FT pensions governance committee. 

What drew you to work in the pensions industry?
I like an intellectual challenge. I like things that are complicated — although pensions aren’t that complicated, there are a lot of moving parts. I like working with nice people and I like flexibility. All of those things appealed to me about the pensions industry. My view at that point was to do professional trusteeship, because it’s quite flexible. 

What are you most proud of in your career?
Doing things slightly differently. Many of the things I’ve done look so normal and predictable — private school, Oxbridge, chartered accountant, financial services firm — nothing interesting to see here. But moving to Scotland was a big decision when I knew nobody up there. 

I’m also proud of prioritising the things that are really important to me, not other people. I used my accountancy qualification to create a working pattern and lifestyle for myself that enabled me to balance work I loved, a reasonable income and a quality of life that I have really enjoyed. When I started with non-executive work, I had people telling me to do this sort of job, and that sort of job. I didn’t want to, so I didn’t — even if it made my path more complicated. 

How do you manage your own pension?
I have a few different pension sources. I was lucky enough to join a non-contributory final salary scheme in 1999. I now have a widow’s defined benefit pension and some self-invested pensions that I have built up while I’ve been self-employed. It’s invested in plain vanilla, low-cost passive investments through a low-cost investment platform. I do believe there are active managers out there who can consistently beat the market but I’m not sure of my ability to pick them. 

How do your finances influence your lifestyle choices?
My lifestyle developed from a young age and my career choices and finances have followed as a result. I’m fairly low maintenance. The things I enjoy doing are outside and in nature, such as swimming in the sea and climbing hills. They don’t tend to cost massive amounts of money. It’s about generating enough so I feel financially secure, without working all the time, so I can enjoy where I live.

How did your upbringing impact your view on money?
Up until the age of 10, there wasn’t much money around. My parents had four kids under the age of five by the time I came along and lived on a dairy farm and worked the dairy farm themselves. But we didn’t want for anything — we just wanted to run around and get really dirty. My very early years taught me that you don’t need money to have fun. 

What are the biggest money lessons you’ve learned?
Being married is a very useful thing if you happen to have the misfortune of being bereaved. The biggest financial problem I would have had recently is if I hadn’t been married and had to pay inheritance tax on half the house. And I was fortunate that Fraser had life insurance. We built a two-income life and now there’s only one income to support it. I’m a risk geek — thinking of contingency planning in your finances is really important. Think “what would we do if?” Big things can happen and they can have massive financial consequences when you are least able to cope with it. I tell everybody to make a will. 

What’s been your worst investment?
The properties that we’ve lived in have not been in high value-growth areas. I don’t see the property you live in as an investment but had we spent the money we spent on property in different locations we probably would have made a lot more money. We had a house in a place called Kilsyth for 25 years — 15 miles north-east of Glasgow. We probably broke even on it, after what we bought it for and spent on it.

This house I live in now — even if I’m here for the next 15 years, it probably won’t sell for what it cost me to build. But I think homes are for living in and having a good life in. 

What financial advice would you give your younger self?
Don’t bury your head in the sand and ignore your finances. Apply a little bit of effort. It’s not that complicated.

Get a credit card and pay it off. Building up a credit record from a reasonably young age is a useful thing to do. I didn’t have one in my own name until 10 or 15 years ago. Had I not had one when Fraser died, it would have been a real problem, as it would have been much more difficult for me to put the mortgage into my name. If you are applying for credit you need to have had debt and paid it off.

What one thing would you change about the UK’s pension system?
I’m a big proponent of collective defined contribution schemes. We are making important steps to bring in regulations for multi-employer CDC and we have the Royal Mail CDC. If we can develop these schemes and put in the right regulations around them so they persist for a long time, then they will be a fantastic addition to the pensions system. 

My advice for individuals is to tell your workplace pension provider when you are thinking about retiring because that really affects how the trustee will invest your money for you. And tell your provider if you move house. And check how much your employer will pay in when you are thinking about your contribution levels.